The dollar index, which measures the greenback against six major currencies, was up 0.83 per cent at 95.562 in late trading on Friday, the highest level in three weeks.
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Europe’s broad FTSEurofirst 300 index closed down 0.17 percent, at 1,350.4.
The rate hike talk, which came out of the Fed’s central banking symposium at the end of last week, sent the dollar up past 102 yen, after having dropped to 99.9 yen last week. Hong Kong’s Hang Seng .hsi pulled back 0.3 percent.
US stock markets and the dollar climbed on Monday while European share markets fell, following comments by top Federal Reserve officials that bolstered expectations for an interest rate hike by the USA central bank this year.
United States consumer spending increased for a fourth straight month in July amid strong demand for automobiles, pointing to a pickup in economic growth that could pave the way for the Fed to raise interest rates this year.
“A much stronger United States dollar is causing selling pressure today”, said Carsten Fritsch of Commerzbank. Asked on CNBC whether a rate hike in September and more than one policy tightening before year-end should be expected, Fischer said Yellen’s comments were “consistent with answering yes” to both questions, albeit still data-dependent. Traders, while raising expectations for rate increases this year, remained cautious.
The CME Group’s FedWatch tool showed the market pricing in more than a 30 per cent chance of a rise in September, up from 18 per cent before Yellen and her deputy Fischer spoke.
“It is looking more likely that we will see a rate hike this year, and September is a good possibility”, said Richard Sichel, chief investment officer of Philadelphia Trust Co in Philadelphia. USA 30-year Treasury bond US30YT=RR yields also fell, with their prices rising more than a full point. US crude was down 80 cents, or 1.68 percent, at $46.84 per barrel. It held steady at 95.518 on Monday. Benchmark 10-year yields US10YT=RR were last at 1.575 percent, compared to 1.633 percent late Friday.
Oil prices fell on Monday as the US dollar rose following relatively bullish talk from the US Federal Reserve.
Goldman Sachs’ GS.N 1.1 percent gain made it the top influence and the biggest gainer on the Dow. A strong dollar is a boon for Japanese exporters. Iran also said late last week that it would only cooperate in upcoming producer talks in September if other exporters recognized Tehran’s right to regain market share lost during worldwide sanctions that were only lifted in January.
In New York, a barrel of West Texas Intermediate for October delivery fell 66 cents to close at US$46.98.
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Brent crude settled down 66 cents, or 1.32 percent, at $49.26 a barrel.
